I speak and write about investor protection, money management, health economics, ecology and social issues. My latest book is "Keynes's Way to Wealth," a revealing look inside the successful portfolios of the world's most famous economist. All told, I've written 14 books including The Cul-de-Sac Syndrome and iMoney: Profitable ETF Strategies for Every Investor and write a column for Reuters.com. I speak across the U.S. and my writing also appears in the New York Times, Morningstar.com and other national publications. This blog delves into financial and social deceptions.

The Curse of Saddam: Iraqi Dinar Deals

Saddam Hussein may be long gone from Iraq, but speculation in his currency persists like a poltergeist.

The Iraqi dinar has been the recent object of desire of foreign currency operators selling mostly on the Internet. The pitch goes something like this: “Buy dinars because the current government will revalue the currency and you will get rich.”

As with most other hyperbolic pitches, the promise of wealth is couched in language like “sure to appreciate” and “virtually guaranteed.” There’s absolutely nothing guaranteed in the foreign currency world, which is absurdly speculative and nearly unpredictable.

“Apparently, there are those who are selling Iraqi paper Dinar in the US. From what I can gather, they convince people that the exchange rate will be `reset’ as some point in the future so the value in USD will go up 100 fold,” Hancock emailed me. “Their “basis” for this argument is that this is what happened with the Kuwaiti currency after the first gulf war.”

I have a client who fell for this at the insistence of her son in law,” Hancock continues. ”I have had two people call me for advice on how to invest their windfall — both convinced that they would gain in excess of a $1 million — money coming to them at a date in the future when the currency reset. All three were people who have little to no financial knowledge. All three had stuffed a local safe deposit box with the paper currency. Best I can tell, the currency is being sold at a 40% premium over its market rate.

What the victims don’t realize is that, in this case, if a reset of the Iraqi currency were a sure thing, the person selling it would be hoarding it, not giving away this special information. The victims don’t realize that this known information has already been reflected in the current price. If the market price did not move, then the market collectively does not believe that the price will be reset.”

Image via Wikipedia

There are some more nasty wrinkles to what’s behind the dinar curtain. It’s illegal for U.S. dealers to market investments without securities licenses, although currency operators can often get around this by signing a form with the U.S. Treasury Department calling them “money service businesses” and marketing the currency as if it was a collectible. This is far from a rigorous securities brokerage license; it’s little more than a piece of paper.

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If anything, consider doing another article after you’ve studied this issue a bit more thoroughly. It would be great to see you do an article from the other direction, painting a picture of THE NEW DINAR, the IQD and the truth of the Revaluation. I will give you a hint. There’s a lot more to the IQD RV then what meets the eye. All the FOREX markets are linking in the electronic world John, you know that. If a large RV were to happen, it probably will happen unlike any other RV has ever happened since it is linked to so many other nation’s benefits. So consider this. As an investment, this is not an investment to poo poo, simply because it is well known that most of the major countries have large shares of the NEW IQD in their treasuries and are awaiting this RV with more anticipation than the single person investor.

I hate your ass John….You should not give away such info….We at PTR forum and myself are making tons of money by crancking up people to this…We all know it wont revaluate but speculations on the dinar is what we live with, we are becoming rich with those who believe in the dinar!!!! Let the ride be !!!!

John, who piddled on your Post Toasties? Look up the FACTS about this situation. The UST has TRILLIONS of Iraqi Dinar. Our Gov. is doing more than speculation. They have stated that the capital gains tax money that will be generated from this RV will balance the books, even before they cash in their own holdings. Just like the First Gulf War, the soldiers that came home from Iraq were given Dinar as a bonus. The European economy is COUNTING on this RV, to put a short-term fix on the Euro situation. Last week, Kuwaite forgave BILLIONS of Iraqi debt, stating that their investment in IQD will make up for the loss, by double, when the RV occurs. Now, most of us in the investments world know that there are reporters that were ordered to down-play this opportunity, to minimize the amount of Americans getting involved.

Thanks for your article about the Iraq Dinar. I am one of those who gambled on this investment last year. I purchased 1,200,000 dinars thru a bank & a dealer (200,000 & 1,000,000). The internet websites say it will revalue soon but this has been going on now for months ! Every day they say tomorrow to no avail. I’m beginning to think maybe “scam” ? Here is hoping I am wrong & it will revalue ? D. P. Patterson Jr. soonerad@valornet.com

The present currency – since 2003 – has nothing to do with Sadaam .. yet you depict it as if it does …

Iraq has multiple times the natural resources of Kuwait – whose dinar is at $3.68 … do you honestly think that owning Iraq’s currency is a “scam” … if so – all the banks and airport foreign exchanges in America and the world that sold it will be charged with crimes – REALLY ??? LOL <<<<<

The Governor of the Central Bank of Iraq stated all he needed was a Government complete to change the rate … with the upcoming Arab Summit, and imminent announcement of a completed government – I'm pretty sure you own some.

Iraq has announced plans to REDENOMINATE the Iraqi dinar. They will lop 3 zeros from it. Iraqis will have to turn in all current dinar and for every 1000 they turn in they will get 1 new dinar in return. That is standard redenomination/lop procedure. That is how ALL redenominations have happened in the past and Iraq has said a number of times that they are doing the same thing as the other countries have done. For those holding dinar outside of Iraq you will have to deal with the same dinar dealers who got you into this scam… to get you out of this scam. The internet is full of dinar scammers making up lies and misinterpreting articles to lead people to believe a huge RV is coming. That is a scam.

It’s always interesting to see articles like this. The most interesting is that they are showing & talking about currency with Saddam’s picture on it! That’s not the new currency that the U.S. printed for them and is now currently in the CBI. So, I’d have to say that as amazing as it is coming from Forbes, this article is extremely incorrect and poorly researched. NOTE: the Saddam currency IS worthless. This writer is right about that. However, This writer needs to go back to journalism 101….. Lesson #1 …..DO YOUR RESEARCH!

John Wasik – If you were a doctor, and did your job like you do your current job, people would die. No one can really know with any certainty what the future holds for this currency, but you sir really need to go back to journalism 101 and learn to research a topic before writing about it. Is anyone else confused as to how this guy got a position writing for Forbes? After reading this article I had the same bewilderment as I would if I took a visit to the Pentagon and saw a 10 year old running mission control.

Mr. Wasik, your article did precisely what it intended…spark angst! I’m certainly no dinar “guru” nor a completely oblivious consumer, however this is an extremely low risk investment. Anyone that purchased dinars from a “legitimate” exchange org, can simply return the dinar if they’re too nerve-wracked to wait-it-out. By the way, the exchange (cash-in) rate is about $10 for every $500 USD investment (at least where I purchased my dinar).